Common interest community associations
Q. I have lived in several subdivisions of single-family homes in Long Grove. Each has been governed by a homeowners' association, and each has a declaration of covenants, restrictions and easements. Is there a statute that governs these associations?
A. Long Grove is a community of single-family home subdivisions that typically have private streets, and may have community wells, ponds, walking paths, signs and other common amenities. These subdivisions are typically governed by a homeowners' association that maintains these amenities, via a board of directors. Each homeowners' association is established pursuant to a recorded declaration of covenants, restrictions and easements. These declarations also include restrictions on the use of the individually owned lots, which are enforced by the homeowners' association.
Illinois law considers these associations to be "common interest community associations," as defined in the Illinois Common Interest Community Association Act. Common interest community associations must be in full compliance with the Act. That said, a common interest community association organized under the General Not for Profit Corporation Act of 1986 and having either, 1) 10 units or less, or 2) annual budgeted assessments of $100,000 or less, is exempt from the Act.
That said, an association that is exempt from the Act can nonetheless affirmatively elect to be covered by the Act by a majority of its directors or members.
The declaration of covenants, restrictions and easements for most Long Grove homeowners' associations were prepared and recorded long before there was an Illinois Common Interest Community Association Act, so many associations might not even be aware of it! These associations would be well-advised to consult with legal counsel to determine if they are governed by the Act. If they are exempt from the Act, they should also consider the benefits of electing to be governed by the Act.
Q. You have beaten the drum about the need to provide an owner due process before the board can levy a fine. Our association issues a lot of notices of violation each month. However, the board meetings are only held quarterly. How does that impact on our ability to actually levy the fine?
A. If the board is so inclined, the board can conduct rules violations with owners in between the scheduled quarterly board meetings. These gatherings can be held without the notice that is normally required for board meetings. These gatherings would not be considered board meetings, as these gatherings for this purpose are permitted by both the Illinois Condominium Property Act and the Illinois Common Interest Community Association Act. However, any decision of the board regarding the violation heard at such a gathering outside of a board meeting, including the levying of the fine, could only take place at one of the board's open quarterly meetings. Such decisions could not be made at these gatherings outside of a board meeting.
The alternative is to hold more frequent board meetings, or to conduct these hearings at your quarterly board meetings.
Q. Should a contractor performing common element work for our association provide a lien waiver? If so, when should it be provided?
A. In a "nutshell," a contractor should provide a contractor's sworn statement (identifying who did what work and supplied what materials and for how much) in connection with any request for payment. A lien waiver for the contractor and for subcontractors/material suppliers identified in the contractor's sworn statement in connection with any request for payment must also be delivered to the association. The lien waivers need to be delivered at the same time as payment, since lien waivers delivered in advance of actual payment are not valid in Illinois (even though advance delivery of lien waivers is a common practice).
It is not uncommon for a contractor to collect lien waivers from its subcontractors, and to provide the collected lien waivers to an association in exchange for payment to the contractor. If the subcontractor provides such a lien waiver in advance of payment, the association could still be obligated to pay the subcontractor if the contractor does not submit payment to the subcontractor. That is not a good situation for an association to find itself.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.